The US Court of Appeal has sided with technology holding company E-Pass, and ruled that a patent held by E-Pass may indeed have been infringed by PDA makers Palm and HP, and by Microsoft after all.

The ruling, reported by Brighthand, dismisses a 2002 District Court judgement that E-Pass' patent, which describes a credit card-sized device, do not extend to devices of a different size.

E-Pass' story goes back to 1994 when one Martmut Hennige was granted patent number 5,276,311. The patent describes a "multifunction, credit card-sized computer that allows users to securely store a multitude of account numbers, PIN codes, access information and other data from multiple credit cards, check cards, identification cards and similar personal documents".

Six years or so later, E-Pass, which administers Hennige's patent, attempted to sue 3Com, then Palm's owner, as we reported at the time. E-Pass claimed that Palm's PDAs infringed the patent.

"Not only do 3Com's products utilise the E-Pass patented technology, but 3Com advertises, promotes and sells its products with literature that instructs customers on how to use its products in ways described very specifically and in great detail in the 1994 patent," said Stephen Weiss, E-Pass' attorney, at the time.

Two years later, in 2002, E-Pass extended its action by filing similar suits against Compaq and Microsoft. It alleged Microsoft had actually tried to buy the patent for $10 million. E-Pass said if refused to sell, and claimed that Microsoft subsequently behaved as if it had never heard of the patent.

That same year, however, the 3Com case was ruled as lacking merit. The judge said that since Palm's devices were not credit card-sized, as explicitly defined in Hennige's patent, they could not be said to infringe that particular method. E-Pass, however, said it would appeal the ruling. The Microsoft and HP/Compaq actions were put the back burner until the outcome of the appeal was known.

Now it is, and it's not good news for Palm, HP or Microsoft. The Court of Appeals judge, Senior Judge D. Lowell Jensen, ruled that the patent covers all handhelds, whether they are the same size as a credit card or not.

Judge Jensen's ruling essentially centred on argument that the term 'credit card-sized', when applied to electronic devices, was intended to be generic rather than to refer specifically to the industry standard length, breadth and thickness of a credit card.

Of course, Judge Jensen's ruling merely states the original judge's grounds for dismissing the action were at fault, and not that Palm's devices do infringe the patent. Palm can no longer claim that its devices do not infringe the patent on the basis of size, but they may yet prevail against E-Pass using other arguments to show a clear gap between the device described in the patent and its own products.

E-Pass said in a statement that not only does it intend to re-commence its action against the three companies, but has begun "a thorough evaluation of all products and processes that might be covered by its patent", so other vendors may find themselves on the receiving end of E-Pass lawsuits too. ®