A federal district court has ruled that a patent held by E-Pass Technologies covers more than just credit card-sized handhelds, and therefore HP, maker of the iPAQ line of Pocket PCs, may owe E-Pass millions in licensing fees.
This company is also bringing a similar case against palmOne.
The Historical Background
In 1994, Hartmut Hennige, E-Pass’ founder, was granted a patent for a multifunction, credit card-sized computer that allows users to securely store account numbers, PIN codes, access information, and other data from multiple credit cards, check cards, identification cards, and similar personal documents.
In 2000, E-Pass filed a lawsuit against 3COM, who was then the maker of Palm handhelds, on the grounds that its handhelds infringed E-Pass’ patent.
It filed a similar lawsuit against Microsoft and Compaq in 2002. According to E-Pass, Microsoft had attempted to buy the rights to the patent for $10 million, but E-Pass refused. Rather than raise the price, E-Pass claims Microsoft decided to ignore the patent.
Later in 2002, a federal judge made a summary judgment that the lawsuit against 3COM was without merit, on the grounds that the patent covered only credit card-sized devices. The separate lawsuit against Microsoft and Compaq was put on hold, pending the appeal of the first case.
In the intervening time, Compaq merged with HP and Palm Inc. split off from 3COM and changed its name to palmOne.
In August of last year, a U.S. Court of Appeals judge ruled that the E-Pass Patent is not restricted to just credit card-sized handhelds, which allowed E-Pass to take up its lawsuit against palmOne in district court again.
The Latest Ruling
This week, according to The Register, the U.S. District Court for the Southern District of Texas agreed with the earlier Court of Appeals ruling and said that it applies in E-Pass’ lawsuit against HP.
This ruling, though a necessary one for E-Pass if it is going to eventually get licensing fees from HP, has some advantages for HP as well. It is now free to show that there were already other devices similar in size and function to iPAQs on the market before Mr. Hennige filed his patent in 1994, and therefore the patent is invalid.
Thanks to barjinder for the tip.