By Bill Schuurman and David Killough
In a case widely watched for its potential implications, V&E successfully defended Prodigy Communications Corp., one of America’s leading Internet service providers, in a patent infringement suit brought by British Telecommunications PLC in the Southern District of New York. The case was regarded by many Internet observers as a test case because it dealt, in part, with the issue of whether older patents can be broadly interpreted to cover Internet-related technology unanticipated at the time of their filings.
In the case, British Telecom asserted the so-called "Sargent" patent against Prodigy. The "Sargent" patent stemmed from a patent application the British Post Office originally filed in England in 1976. It issued in 1989 following 13 years of prosecution before the United States Patent and Trademark Office. The "Sargent" patent claimed to cover a system that allowed multiple individual users to access, via the telephone network, "blocks" of information that are centrally-stored in a single computer. The "blocks" of the Sargent patent were linked to one another through a menu-driven addressing system.
British Telecom claimed that the Internet is an analogous system, arguing that multiple users access Web pages stored on individual Web servers and that these users navigate among the Web pages through the use of hyperlinks (the coded, highlighted text that links one Web page to another). The court, however, disagreed, finding that even if the Internet is viewed as a system, it does not infringe the "Sargent" patent because it contains no central computer. Additionally, the court held that Web pages and hyperlinks are not the "blocks" and complete addresses claimed in the "Sargent" patent.
The court ruled that because the Internet itself does not infringe the Sargent patent, Prodigy could not be liable for contributory infringement or active inducement for providing its users with access to the Internet. The court granted Prodigy’s summary judgment motion for non-infringement and dismissed British Telecom’s claims in the case. British Telecom decided not to appeal the court’s ruling.
If British Telecom had prevailed, it was expected to seek royalty payments from Prodigy and other U.S.-based Internet service providers that could have amounted to hundreds of millions of dollars annually.
Austin partners Bill Schuurman and David Killough led the V&E team representing Prodigy.
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