Microsoft and HP have suffered a set-back in their attempt to defend themselves against allegations made by a patent holding company that their PDA software and hardware violates its intellectual property.

Last week, Judge Kenneth M Hoyt of the US District Court for Southern Texas in Houston rejected a request made by Microsoft and HP in July this year that a series of claims made in the patent, number 5,276,311, filed in 1989 and granted in 1994, were invalid due to prior art.

E-pass' patent covers a "multifunction electronic card" which can be used to store information on a range of credit and debit cards, accessed securely through a password system. Essentially, it describes a single device that users can carry around in place of a multitude of cards.

Long-time Register readers will recall that E-pass sued not only Microsoft and Compaq (now part of HP), but 3Com's Palm subsidiary (now PalmOne). In each case, it accused them of selling PDAs that duplicate functionality and techniques outlined in its patent, without authorisation. The Palm action was initiated in 2000, the Microsoft/HP case in 2002.

E-pass is also suing the Visa organisation. It claims Visa met the company in 2000. After the meeting, it never heard from Visa again, until it spotted Visa's then VP for Product Development, Susan Gordon-Lathrop, appear with then Palm CEO Carl Yankowski to demo a Palm storing secure credit card details.

The MS/HP case was put on hold pending the outcome of the Palm action, which initially saw Palm victorious - only to be defeated at appeal. Much of the legal toing and froing to date has centred on the patent's use of the word 'card' and what that word means exactly, in this context. 'Card', the defendants claimed, means a specific thing - something thin, flat and the size of a credit card. Our devices are no so sized, said Palm - ergo, they do not infringe E-pass' patent.

The US District Court of Northern California agreed, but in August 2003, the appeal court rejected the verdict, sending the case back to the lower court. The Court of Appeal did not address Palm's infringement or otherwise of E-pass' patent, only that the lower court had been mistaken in its application of the law.

The following November, E-pass won the right to re-commence its action against Microsoft and HP on the basis of that appeal court judgement. In February 2004, Judge Hoyt confirmed the appeal court's ruling and its definition of the word 'card' - it's any "flat, rectangular piece of stiff material", in case you were wondering - and essentially brought the Microsoft/HP case into alignment with the Palm action.

The latest judgement centres on a request for dismissal based on prior art. Microsoft and HP claim US patent number 4,701,601, the Visa SuperSmart card - which embodies that patent - and a manual designed for the SuperSmart both detail key elements of E-pass' patent before 5,276,311 was filed. However, Judge Hoyt ruled that in each of the three cases they did not anticipate the claims made in E-pass' patent.

Assuming no further requests are made, the case is scheduled to go to trial in March 2005. ®

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